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Red Hat shares drop after earnings

Shares of the leading seller of the Linux operating system fall after the company reports revenue below analyst expectations.

Stephen Shankland Former Principal Writer
Stephen Shankland worked at CNET from 1998 to 2024 and wrote about processors, digital photography, AI, quantum computing, computer science, materials science, supercomputers, drones, browsers, 3D printing, USB, and new computing technology in general. He has a soft spot in his heart for standards groups and I/O interfaces. His first big scoop was about radioactive cat poop.
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Stephen Shankland
Shares of Red Hat, the leading seller of the Linux operating system, dropped 18 percent Wednesday after the company reported revenue below analyst expectations.

Shares fell $1.22 to $5.58.

Raleigh, N.C.-based Red Hat on Tuesday reported revenue of $18.6 million for its quarter ended Feb. 28 and a net loss of $28.9 million for continuing operations.

Goldman Sachs analyst Thomas Berquist expected revenue of $22.1 million, while J.P. Morgan Securities' Christopher Galvin expected $22 million.

"Linux will be adopted, but who will profit from it?" Berquist said in a report Wednesday. "We expect that within three to five quarters, it will become clear whether or not Red Hat will be able to become the leading, established provider of Linux solutions to the enterprise. While we expect it to be a challenge, we think that the company may be able to compete effectively with larger firms, given its leading Linux operating system and significant capitalization."

Galvin lowered his fiscal 2003 estimates from $99.2 million to $96.7 million, while Berquist lowered his projections to $92.2 million.